Philippe Van Kerm

Income inequality and self-rated health status: evidence from the European Community Household Panel.

We examine the effect of income inequality on individualś self-rated health status in a pooled sample of 11 countries, using longitudinal data from the European Community Household Panel survey. Taking advantage of the longitudinal and cross-national nature of our data, and carefully modeling the self-reported health information, we avoid several of the pitfalls suffered by earlier studies on this topic. We calculate income inequality indices measured at two standard levels of geography (NUTS-0 and NUTS-1) and find consistent evidence that income inequality is negatively related to self-rated health status in the European Union for both men and women, particularly when measured at national level. However, despite its statistical significance, the magnitude of the impact of inequality on health is very small.

Generalized measures of wage differentials

This paper considers measures of wage differentials not solely determined by mean comparisons but summarizing differences across complete wage distributions. The approach builds on considerations of risk or inequality aversion and on standard expected utility concepts. In an application to the gender pay gap in Luxembourg the disadvantage of women persists according to the proposed measures: lower mean wages for women are not compensated by differences in higher moments of wage distributions (e.g., by less dispersion) at least for realistic assumptions about women preferences toward risk and inequality. The paper also illustrates an original empirical model for wage distributions in the presence of covariates and under endogenous labour market participation.

Wealth Inequality: A Survey

We survey the issues involved in comparing wealth distributions and measuring wealth inequality with illustrations from the Eurosystem Household Finance and Consumption Survey.

Measuring and accounting for the deprivation gap of Portuguese immigrants in Luxembourg

This paper examines the relative well-being of Portuguese immigrants in Luxembourg by looking at non-monetary, or ?direct indicators? of material deprivation. The paper not only documents deprivation differentials between immigrants and natives, but also models the association between material deprivation indicators, income and population characteristics in order to shed light on the sources of differentials. In particular, we measure how much income differentials explain differences in material deprivation. We find that answer to this question depend a lot on what deprivation indicators are taken into consideration (and a little on how aggregate material deprivation indicators are constructed). Income differences explain material deprivation differences entirely when the latter is measured according the European Commission?s headline indicator on material deprivation. Inclusion of housing condition indicators mitigates this relationship and we then find compelling evidence that material deprivation is not entirely accounted for by income differentials.

Assessing Individual Income Growth

We develop methods for describing distributions of income growth across individuals and for comparing changes in growth distributions over time. The methods include graphical devices (‘income growth profiles’) and dominance conditions, and also summary indices, together with associated methods of estimation and inference. Taking an explicitly longitudinal perspective, our approach illuminates clearly who are the gainers and the losers, and also provides distributionally‐sensitive assessments — ones that allow the income growth for different individuals to be weighted differently. Our empirical application shows that the pattern of income growth in Britain over the period 1992–6 was less pro‐poor than that for 1998–2002, and not significantly different from the pattern for 2001–5.

Modeling the Joint Distribution of Income and Wealth

Abstract This paper considers a parametric model for the joint distribution of income and wealth. The model is used to analyze income and wealth inequality in five OECD countries using comparable household-level survey data. We focus on the dependence parameter between the two variables and study whether accounting for wealth and income jointly reveals a different pattern of social inequality than the traditional “income only” approach. We find that cross-country variations in the dependence parameter effectively account only for a small fraction of cross-country differences in a bivariate measure of inequality. The index appears primarily driven by differences in inequality in the wealth distribution.

Wage Differentials between Native, Immigrant and Cross-Border Workers: Evidence and Model Comparisons.

This paper exploits a parametric variant of the Machado-Mata simulation methodology to examine wage distribution differences between native and foreign workers in Luxembourg. Relying on ‘parametric quantile regression’ in place of repeated linear quantile regressions cuts computing time drastically with no loss in the accuracy of unconditional quantile simulations. Substantively, we find a clear inverted-U-shaped native worker advantage: the advantage is small (possibly negative) for both low and high quantiles, but it is large for the middle half of the quantile range (between the 20th and 70th native wage percentiles). The pattern holds against both immigrants and cross-border workers, although the latter catch up much less at high percentiles. Differences in human capital and job characteristics hardly account for the gap, unlike sorting into different jobs and occupations which account for a substantial share—although not all—of the gap.

Earnings Dynamics, Foreign Workers and the Stability of Inequality Trends in Luxembourg 1988-2009

This paper exploits a large-scale administrative dataset to document trends in male earnings inequality in Luxembourg over twenty years of rapid economic growth. A detailed error components model is estimated to identify persistent and transitory components of log hourly earnings variance. Given the importance of foreign labour in Luxembourg, models and inequality trends are distinguished between native, immigrant and cross-border workers. Surprisingly, we observe only a modest increase in overall hourly earnings inequality between 1988 and 2009. This apparent stability is however the net result of somewhat more complex underlying changes, with marked increases in persistent inequality (except among native workers), growing contribution of foreign workers, divergence across subgroups, and a decrease in earnings instability (primarily for native workers). Overall, we interpret these results as showing a surprising stability in the face of the industrial re-development, the changes in the size and structure of employment, and the fast growth that characterized the countrys economy in this period. Such results possibly hint at the role of strict labour market regulations and collective bargaining institutions in holding back earnings inequality, at least in a period of fast economic growth and soaring demand for labour.

How does attrition affect estimates of persistent poverty rates? The case of EU-SILC

Evidence about poverty persistence is an important complement to information about poverty prevalence at a point in time. The persistent at-risk-of-poverty rate is one of the primary indicators of social inclusion, and the only indicator that is derived using samples from the longitudinal component of EU-SILC. Sample drop-out from the longitudinal samples (‘attrition’) reduces sample size thereby decreasing the precision of estimates of persistent poverty indicators, and may be selective and lead to bias. We examine these issues. We show that rates of attrition from the four-year EU-SILC samples used to calculate persistent poverty rates vary substantially across Member States, and there is also substantial cross-national diversity in the characteristics of individuals lost to follow-up. We provide evidence that application of longitudinal weights does not fully account for the effects of attrition, and that different assumptions about the poverty status of attritors lead to wide bounds for estimates of persistent poverty rates for most Member StatesThe paper presents the current state of progress of the Net-SILC2 work package dealing with standard error estimation and other related sampling issues in EU-SILC. The aim of this work package is to develop a handbook with a concrete set of recommendations both for data providers and data users with regard to standard error estimation. The increased complexity of EU-SILC, the widening of the user community and the increased reliance on EU-SILC for policy targeting and evaluation have enhanced the need for comparable, accurate as well as workable solutions for the estimation of standard errors and confidence intervals. After presenting the variance estimation methodology which has been recommended, the paper shows numerical results obtained for some of the EU-SILC key indicators.

Inequality-Adjusted Gender Wage Differentials in Germany

This paper exploits data from the German Socio-Economic Panel (SOEP) to re-examine the gender wage gap in Germany on the basis of inequality-adjusted measures of wage differentials which fully account for gender differences in pay distributions. The inequality-adjusted gender pay gap measures are significantly larger than suggested by standard indicators, especially in East Germany. Women appear penalized twice, with both lower mean wages and greater wage inequality. A hypothetical risky investment question collected in 2004 in the SOEP is used to estimate individual risk aversion parameters and benchmark the ranges of inequality-adjusted wage differentials measures.